Wednesday, June 29, 2016

The ongoing vigorous discussion of Brexit seems to be vacuous on both sides of the argument, because it misses the most important physical realities of staying alive in Great Britain, not merely of who gets to stay there. The British Isles consist of some 6000 specs of land with the total area of 315,000 square kilometers (the area of Poland or Arizona). They are inhabited by over 70 million people (roughly twice the population of Poland and over ten times the population of Arizona).

My own calculations of Great Britain’s carrying capacity pointed more towards 3 million people, who could be sustained by the local environment. This means that to stay alive the Brits must be a part of a global community; otherwise they will perish. And that’s that.

Let me rephrase now: The United Kingdom is a small, overpopulated and rather insignificant country, which thought otherwise and consequently made a rather suicidal choice that would expose its terrible existential weaknesses. The European Union seems to hold almost all cards in this hunger game, but does not quite realize it yet.

After a temporary upward hick up, Great Britain’s oil production will continue to decline precipitously. And she has produced almost all of her available natural gas and coal. Therefore, to keep lights on and stay warm, the Brits must be a part of a global community. And how about the all-imported raw materials for industrial production to create those good domestic jobs? Foreign trade and treaties anyone?

So how did the world’s oldest democracy get so thoroughly confused and followed the irresponsible advice of its local Trumps? It is all about economics, stupid.

Economics is a pseudo-science of intermediate asymptotics, which describes the human systems that are much bigger than their smallest elements, but much, much smaller than the environment that contains them. It is a pseudo-science because the key phrase, “intermediate asymptotics,” has been forgotten.

The global economy and - in particular - the British economy violate the “much, much smaller” part with deadly consequences.
If most of the world leaders and population are inside of a wrong narrative, the results can be catastrophic. The current narrative is that of a seamlessly integrated, smoothly operating global economy that provides for all and lifts the poorest nations out of poverty.

But what if there is not enough of the Earth to support this global economy of 7.3 billion people? What if the human economy (our household) is interfering with the Earth’s support systems: air, water, soil, and her households, forests, savannahs, lakes, rivers, estuaries, seas and oceans? In short, what if the entire global support system for the human economy is breaking down? What if we already need four Earths to deliver on the promises of today's global economy?

At this point the accomplished economists will shrug me off, because I must be talking nonsense. Look at all of the phenomenal growth in money supply around the world. Look at all of the things this money can do! Yes, says I, this electronic imaginary money will only hasten the demise of the still functioning real ecosystems that protect us from demise.

But I digressed.

Let’s go back to the hapless Great Britain. In my mind, she is like that Yale economist, Irving Fisher, who shortly before the October 29, 1929, market crash, famously proclaimed, "Stock prices have reached what looks like a permanently high plateau.” Perfect timing! The rest will be a very painful journey of changing the narrative for everyone.

P.S. 07.03.2016. The estimated population of England between the years 1800 BC and 1700 CE, averaged 3 million people, but was less than 2 million for 3000 years. At the time of William the Conqueror's Census, this population was 1.7 million people. Add 1 million people for Ireland and Scotland, each, and one may obtain an estimate of about 5-6 million people, who could be sustained by the U.K. If people in the near future will want to live on more resources than a 1000 years ago, the number of supported individuals will drop proportionally.

Wednesday, March 16, 2016

In Part I of this post, I discussed production of gas from the four largest shale plays in the U.S. Ordered by production levels, these are the Marcellus, Barnett, Haynesville and Fayetteville shales. In my mind it is quite unlikely that much new drilling will occur in Fayetteville and Haynesville. There will be some drilling in the Barnett and plenty in Marcellus, but significantly less than to date.
Based on my calculations, I concluded that these plays may deliver between 3 and 7 years of U.S. gas consumption in 2015, a far cry from the 100-year gas supply postulated by many experts. Consistently with this view, for at least three years I have argued that the large-scale oil and gas exports from the U.S. may not be good.

Here I consider the two largest oil plays in the U.S.: the Eagle Ford and Bakken shales. Eagle Ford is also a significant gas and condensate producer. At their respective production peaks, these two shales together produced about 3 million barrels of oil per day and destabilized global oil markets on the expectation that both would continue to produce at this high level for several years.

As I show below, oil production from the Eagle Ford and Bakken might have already peaked, and their ultimate production might be 8 billion barrels of oil and 23 Tcf of natural gas. Both may eliminate 3 years of oil imports into America and satisfy 10 months of natural gas consumption. While these volumes are quite significant, they are a far cry from the 15 billion barrels of proven recoverable oil reserves "predicted" by the industry experts for the Bakken shale alone.

The plot below shows global production of crude oil and lease condensate in the world in red and the U.S.A. in blue, both relative to the production at the end of 2004. Notice that between 1982 and 2005, global production of crude oil increased by 20 million barrels of oil per day (20 MBOPD). During the same time period, the U.S. crude oil production decreased by about 4 million barrels of oil per day (4 MOPD). Therefore, the new field projects outside of the U.S. generated an incremental 24 MOPD.

The rate of crude oil and lease condensate production in the world's and U.S.a in millions of barrels per day. Both curves were shifted by subtracting the respective production rates in December 31, 2004, so that the zero level of production corresponds to to this date.

Since 2005, the increase of global production has been numerically equal to the increase of U.S. oil production, which in turn has been dominated by oil production from the Eagle Ford and Bakken. This means that the output of all petroleum projects outside of U.S. has stagnated; production growth in some projects has been exactly cancelled by declines of other projects. In other words, we are near the peak of crude oil and lease condensate production in the world. And this 10-year stagnation of global production happened despite the record investment in upstream E&P of up to $700 billion per year before the last oil price collapse.

If net increase of global petroleum production is almost equal to U.S. shale oil production, it follows that sales of the Eagle Ford and Bakken crudes controlled to a large extent the global petroleum markets. Expecting that U.S. oil production would continue increasing, Saudi Arabia refused to cut its production and price of oil collapsed around the world. It is therefore important to estimate ultimate oil and gas production in both Eagle Ford and Bakken, and possible production declines in both of these plays. Such an analysis has strong geopolitical implications and here I will tread lightly.

Let me start from showing you the overall energy production from both plays in EJ/year and EJ. 1 EJ = 0.81 trillion standard cubic feet (Tcf) of natural gas or 163 million barrels of (equivalent) oil. In 2015, U.S. produced 3.44 billion barrels of oil and imported 2.68 billion barrels. The U.S. also consumed 27.4 Tcf on natural gas.

Supposing that ultimate total production from the Eagle Ford will be 50% higher than the ultimates reported in the two charts below, 2.7*1.5 = 4 billion barrels of oil and 12 Tcf*1.5 = 18 Tcf will be produced. Therefore, in total, the Eagle Ford shale might eliminate 1.5 years of U.S. crude oil imports, and satisfy 8 months of consumption of natural gas.

Please click on the image to see it in full resolution. Rate of total production of oil and gas in the Eagle Ford formation. In EJ/year. The 6 EJ/year at the peak of production is equivalent to 1.6 MBOPD and 6 billion standard cubic feet of gas per day.

Cumulative total (oil+gas) production from the Eagle Ford shale. The ultimate 29 EJ produced is equivalent to 4.7 billion barrels of oil equivalent or 2.7 billion barrels of oil and 12 Tcf of natural gas.

Also supposing that ultimate total production from the Bakken will be
50% higher than the ultimates reported in the two charts below, 2.6*1.5 = 3.9
billion barrels of oil and 3.3 Tcf*1.5 = 5 Tcf will be produced.
Therefore, in total, the Bakken shale might eliminate 1.5 years of
U.S. crude oil imports, and satisfy 2 months of consumption of natural
gas.

Rate of total
production of oil and gas in the Bakken formation. In EJ/year. The 3.2
EJ/year at the peak of production is equivalent to 1.2 MBOPD and 1.6
billion standard cubic feet of gas per day. The Bakken is less rich in gas than Eagle Ford

Cumulative total (oil+gas) production from the Bakken shale. The
ultimate 21 EJ produced is equivalent to 3.4 billion barrels of oil
equivalent or 2.6 billion barrels of oil and 3.3 Tcf of natural gas.

I end with this excerpt from an exceptional book, The Captive Mind, by the famous Polish poet, Czeslaw Milosz, a fellow faculty at Berkeley some years ago, and a winner of Nobel Prize in literature:

An old Jew in Galicia once made an observation: "When
someone is honestly 55% right, that's very good and there's no use
wrangling. And if someone is 60% right, it's wonderful, it's great
luck, and let them thank God. But what's to be said about 75% right?
Wise people say this is suspicious. Well, and what about 100%
right? Whoever says he's 100% right is a fanatic, a thug, and the
worst kind of rascal."

Call me a 60%-right kind of a guy. The number of Americans, who believe that there may be a critical shortage of energy supply in the next 5 years is at an all time low.

Friday, March 11, 2016

Part I of this post shows my calculations of ultimate gas recovery from the Barnett, Fayetteville, Haynesville and Marcellus shales. They might deliver 6-7 years of natural gas consumption in the U.S. in 2015, or might deliver only 3 years worth of U.S. gas consumption. In Part II, I will show my calculations of ultimate recovery of oil and gas in the Eagle Ford and Bakken shales that ultimately might deliver 6-12 months of additional gas consumption. I will also discuss the physical reasons for the negative impact oil production from these two shales has had on global oil prices.

As Asjylyn Loder and others at Bloomberg have noted, another 19 billion dollars of debt of shale oil and gas producers is going into default as of the second week of March, 2016:

Since the start of 2015, 48 oil and gas producers have gone bankrupt owing more than $17 billion, according to law firm Haynes and Boone. Fitch Ratings Ltd. predicts $70 billion of energy, metal and mining defaults this year, and notes that $77 billion of energy bonds are bid below 50 cents, according to a note Thursday (3/09/2016)

Asjylyn Loder, just like Mason Inman, is one of the few thoughtful reporters informed on the subjects of shale oil and gas production, and their economics.

In December 2014, Mason wrote a controversial article published by Nature, one of the most influential scientific journals:

The results are “bad news”, says Tad Patzek, head of the University of Texas at Austin's department of petroleum and geosystems engineering, and a member of the team that is conducting the in-depth analyses. With companies trying to extract shale gas as fast as possible and export significant quantities, he argues, “we're setting ourselves up for a major fiasco”.

This particular quote reverberated in the media around the world and caused a storm of ad hominem attacks on me. Here is the letter signed by Mr. Howard Gruenspecht, Deputy Administrator of the U.S. Energy Information Administration. In that letter I was called a relatively minor player in the definitive UT BEG Shale Study and, much worse, President of ASPO, the Association for the Study of Peak Oil.

Ouch, that hurts! Of course there were other letters and more howling.

Never mind that the BEG study used this model of shale gas production in all of their calculations. Our model was published in the Proceedings of the U.S. National Academy of Sciences (NAS) and was awarded by NAS the 2013 Cozzarelli Prize for best paper in engineering. And never mind that in early 2011, I made an accurate prediction of gas production from the Barnett shale, based on the model originally proposed by Dr. M. King Hubbert, who was the original pre-ASPO researcher. Of course, early on, in 1956, Hubbert was called a lunatic and idiot. But I wrote on this subject many times, see here and here and several other posts, and do not want to repeat myself.

Since in this post I am talking about oil and gas, I will express their production in the units of energy, instead of barrels of stock tank oil and standard cubic feet of gas. To obtain numerical answers between 0 and 30, I will use exajoules (EJ). 1 EJ = ten to the power eighteen of joules is an astronomical amount of energy. 1EJ when digested as food, feeds 320 million Americans for one year. Americans use about 100 EJ per year of primary energy, mostly as fossil fuels, most of them oil and gas. Also, 1EJ equals the high heating value of 1 (0.8 to be exact) trillion standard cubic feet of natural gas (1 Tcf). Currently, U.S. consumes about 28 Tcf (35 EJ) of natural gas per year.

The plots below have consistent x- and y-scales for all mudrock (shale) plays I consider: the Barnett, Fayetteville, Haynesville, Eagle Ford and Bakken. I do not have much faith in the Marcellus shale calculation; it is a relatively young development and production data reporting in Pennsylvania is incomplete and awful. I am very grateful to my friend, Dr. Art Berman, for providing me with the spreadsheets that contain data dumps from the Drillinginfo well production database.

Disclaimer: The plots below are only for the active producing wells up to date. To the extent that robust drilling will continue unabated in each play, the three shale gas plays described below might produce another 50 percent more energy. If the rate of drilling rapidly diminishes, as is the case today, the ultimate production from these three shales may be only 10-20% above the projections in this blog.

Let's do a quick summation: According to my calculations, the Barnett shale will ultimately deliver 9 months of U.S. gas consumption, Fayetteville 4 months, Haynesville 6 months, and Marcellus 14 months. Suppose now that the Marcellus shale will produce as much as these three plays together, or 19 months of U.S. gas consumption (40% more than my calculation). Also suppose that the ultimate recovery from all four shales will exceed my current predictions by 50%. This brings us to (19+19)*1.5 = 5 years of U.S gas consumption (I always round my recovery estimates). I will add the estimated ultimate gas production from the Eagle Ford (5 months of U.S. consumption) and Bakken (2 months of U.S. consumption) in Part II of this blog, and they will add another 1.5 years of U.S. gas consumption. So much for the 100 or 200 years of gas supply from shales "predicted" by the robust technologists.

Warning: When I said in December 2014, that my country is setting herself up for a major fiasco, I was not idly joking nor was I seeking cheap publicity. I merely tried to encourage those who care to listen to refocus their thinking. Is anyone listening a year and a half later?

Click on the image to see it in full resolution. Production rate of natural gas from the Barnett shale in EJ/year. 1EJ = 0.8 Tscf. Data source: Drillinginfo and Texas Railroad Commission, accessed January 2016.

Click on the image to see it in full resolution. Cumulative production of
natural gas from the Barnett shale in EJ. 1EJ = 0.8 Tscf. The estimated total gas production from the Barnett is equal to about 9 months of current gas consumption in the U.S. Data
source: Drilling Info and Texas Railroad Commission, accessed January
2016.

Production rate of
natural gas from the Fayetteville shale in EJ/year. 1EJ = 0.8 Tscf. Note that because of infill drilling and pad drilling two Hubbert curves match the reported production. Data
source: Drillinginfo and Texas Railroad Commission, accessed January
2016.

Cumulative production
of
natural gas from the Fayetteville shale in EJ. 1EJ = 0.8 Tscf. The
estimated total gas production from the Barnett is equal to about 4
months of current gas consumption in the U.S. Data
source: Drillinginfo and Texas Railroad Commission, accessed January
2016.

Production rate of
natural gas from the Haynesville shale in EJ/year. 1EJ = 0.8 Tscf. Likely, because of depletion of the very high initial pressure and new wells that got better with time, two Hubbert
curves match the reported production. Data
source: Drillinginfo and Texas Railroad Commission, accessed January
2016.

Cumulative production
of
natural gas from the Haynesville shale in EJ. 1EJ = 0.8 Tscf. The
estimated total gas production from the Barnett is equal to about 6
months of current gas consumption in the U.S. Data
source: Drillinginfo and Texas Railroad Commission, accessed January
2016

Production rate of
natural gas from the Marcellus shale in EJ/year. 1EJ = 0.8 Tscf. The production data from Pennsylvania are listed every 6 months and are of poor quality. Data
source: Drillinginfo and other sources, accessed January
2016.

Cumulative production of
natural gas from the Marcellus shale in EJ/year. 1EJ = 0.8 Tscf. The estimated total production from the Marcellus is equal to about 14 months of U.S. gas consumption. The
production data from Pennsylvania are listed every 6 months and are of
poor quality. Data
source: Drillinginfo and other sources, accessed January
2016.

Monday, December 28, 2015

We are in the western part of Turkish Anatolia, which in Greek means "East" or "Sunrise." Suddenly, we are inside of many of the oldest human stories that are particularly dear to my heart. The ancient city of Troy is here. Around 1300 B.C., when Troy was almost 4000 years old, the mother of all Greek wars was fought there and immortalized by Homer five centuries later in probably the most important oral stories and later texts ever conceived by rational men: The Iliad and Odyssey. Some of the Greek Gods were born here, many other dueled with one another for power and revenge, or gave birth to the heroes and heroines who determined fate of Troy and future of mankind.

My favorite scary goddess, Nemesis, who is reputed to have been conceived by the primordial Goddess of Night, Nyx, played a pivotal role in the fate of Troy. Her name was derived from the Greek words nemêsis and nemô, meaning "dispenser of dues."

This full size statue of beautiful Nemesis was almost stolen from Perge, Turkey. It was luckily recovered together with the statues of my other favorite gods: Apollo, Artemis, Athena, and Aphrodite. All are displayed at the Museum of Archaeology in Antalya.

Nemesis' mother and birthplace were established by the most reliable ancient sources.

Hesiod, Theogony 211 ff (trans. Evelyn-White):

"And Nyx (Night) bare hateful Moros (Doom) and black Ker (Violent Death) and Thanatos (Death), and she bare Hypnos (Sleep) and the tribe of Oneiroi (Dreams). And again the goddess murky Nyx, though she lay with none, bare Momos (Blame) and painful Oizys (Misery), and the Hesperides . . . Also she bare the Moirai (Fates) and the ruthless avenging Keres (Death-Fates) . . . Also deadly Nyx bare Nemesis (Envy) to afflict mortal men, and after her, Apate (Deceit) and Philotes (Friendship) and hateful Geras (Old Age) and hard-hearted Eris (Strife)."

"[The people of Smyrna in Aiolia in Anatolia] believe in two Nemeses instead of one, saying their mother is Nyx."

Nemesis, old people say, was so beautiful that Zeus fell for her. Nemesis tried to evade the amorous king of the gods by turning herself into a goose. Zeus, undeterred, became a swan and had his way with the white-feathered Nemesis. Later, she laid a golden egg, from which two pairs of twins were born. Here it suffices to say that one of the twin sisters was Helen, later Helen of Troy, the most beautiful mortal woman of her time.

About two decades later, Paris, the younger son of King Priam of Troy, was pressed by Zeus himself to judge which of the three goddesses, Hera, Athena, or Aphrodite was fairest. This happened at at a party to celebrate the wedding of king Peleus of Myrmidons and nymph Thetis, parents of Achilles. Achilles was an invincible Greek warrior, who would later vanquish Hector, the older brother of Paris and bravest Trojan. Brad Pitt played Achilles in the famous 2004 movie "Troy."

Eris, a sister of Nemesis and unfailing party pooper, instigated the imbroglio that engulfed Paris and the three goddesses. To make a long story short, Paris gave Eris' golden apple to the deliciously sexy Aphrodite, who promised him the heart of Helen, then wife of Menelaus the powerful king of Mycenaean (ancient Sparta). Thus, the future fate of Troy was sealed. The two goddesses spurned by Paris never forgave him and helped Greeks whenever they could. To close this circle of fate, Paris later killed the semi-immortal Achilles by shooting him in the heel with an arrow. Achilles' death was not recorded in Homer's Iliad, but this breaking news event was covered by most other media outlets.

But where was I? That's right, I was talking about my long-lasting love of Greek gods, who guided the wise ancient Greeks in creating perhaps the most influential culture and civilization ever. It is said that the Greek gods are dead today. They died, because people stopped believing in them. How unbearably sad...

Apollo and his twin sister Artemis were born close to here on the Greek island of Delos, next to the island of Naxos, where the sweet princess Ariadne of Crete died of sorrow after being abandoned by the ungrateful Theseus. Immediately after delivering Zeus' twins, Leto escaped from Delos to Lycia, about 40 km from our hotel. She was wise to fear Hera's fury.

Perge in western Anatolia, Turkey. This is just one of many streets in
this beautiful city you and I could have lived in. Then there are
public baths, gymnasia, stadiums, amphitheater, and the beautiful
over-sized sculptures of gods and heroes displayed in the museum of
archaeology in Antalya.

When we walked the wide, well-planned streets of Perge, and saw the ruins of a shopping center under a colonnade, the ruins of large houses and public buildings, a water supply canal and ceramic pipework, etc., it was easy to imagine that we could have lived there 2000 years ago, and fit in intellectually and emotionally. Such is our deep connection to the luminous Greek culture and civilization, which are the foundations of the present liberal-democratic and technological civilization of Europe and North America where we belong.

Our rational civilization is now under a siege by the forces of darkness lurking in the subconscious reptilian hole in human brain. When the primitive reptilian reflexes take over, reason is lost, and raw emotions of hate, fear, and religious mysticism dominate. In a classical Hegelian way light begets darkness from both within and without.

Nyx's sister is Gaia, the eternal Mother Goddess, who gave birth to the Earth and the Universe, the Heavenly Gods, the Titans, and the Giants. Gaia is the mother of my beloved living, blue and green planet. Since neither Nyx nor Gaia are dead as far as I can tell, the news of demise of the gods may have been premature.

As I already wrote many times, we are trampling our living planet as never before. The global finance system that pays for the trampling of the still available pieces of pristine environment is infinite in its design. But since only hell can be infinite, the reckless financiers drip with hubris. Which brings me back to Nemesis, who rains fury and death upon men who exude hubris. Nemesis always gets even when too much injustice is done. So beware you fallible, self-absorbed mortals. In the end, your fate is in Nemesis' hands as well as in the hands of other gods whom you have offended by your actions and lack of respect for Gaia. Beware! I see you smiling with disbelief; Nemesis will make sure of that, just like she made the doomed Trojans ignore Kassandra.

Wednesday, November 11, 2015

In 2015, about 100,000 forest and peat fires were started in Indonesia to clear land for oil palm plantations. Palm oil is a valuable commodity used as an automotive fuel, for cooking, in shampoos, creams, lipsticks, mascaras, ice cream, chocolate, and so on. We consume ever more palm oil.

The Indonesian fires blanketed the entire region with haze and emitted more carbon dioxide than the U.S. Here is a good summary. I know you are busy and you probably will not devote 31 minutes of your time to watching something that might impact negatively your country and you. Please look at least at the first 10 minutes of this hard-hitting Coconut TV program. At nine minutes and 41 seconds you will hear about personal threats and thugs sent to dissuade activists from ever mentioning the criminals who run the largest Indonesian racket and pay off the government officials. These criminals work for several large corporations controlled by other nations, mostly rich Western democracies. In many ways, they represent you and me, and our pension plans. And so it goes...

An image taken
from NASA's Terra satellite on Sept 24, 2015, shows smoke from fires in
Indonesia over the coasts of Borneo and Sumatra. I used similar images from the same satellite at the OECD meeting in 2007.

If one burns the dried-out swamp peat and tropical forests, what's left is an unmitigated environmental disaster that will leave the Indonesian islands denuded of fertile soil and unable to feed the ever-growing population. The problem is becoming similar to that of the Easter Island and there is no solution in sight. With the forest and agricultural soil gone, and the coastal mangroves silted out and dead, there will be a dramatic shortage of food for the Indonesian people and fish. In short, there will be a massive migration problem and the near-by Australia will become the next Germany for the environmental refugees from Indonesia. Only Australia is no Germany, and their refugee problem can be 10-50 times bigger. In a few years, many governments will cry out loud: "Who could predict this!" Just don't say that my son and I did not warn you in this short popular paper.

Eight years ago, I gave an impassioned speech at the Organization for Economic Cooperation and Development (OECD) Ministerial Round Table in Paris. I also left a paper manuscript, and told the hapless, unimaginative European bureaucrats that the burning of Indonesia and equatorial Africa is our problem that can be quantified from satellite images. Surprise, surprise! The glossy-paper manuscript disappeared within two hours grabbed by everyone in the room. It was the most popular publication of the conference, I was told. Of course almost nothing has been done since then to address the problem of environmental degradation of Africa and Asia Pacific and the ensuing massive human migration that has already begun.

Since 2007, the list of transnational corporations that eat alive Indonesia and many other places has been growing longer by the year. These corporations give us cheap soybeans from Brazil and Argentina and palm oil products from Indonesia, Malaysia, and equatorial Africa. We then devour the planet without ever thinking about it. Got lipstick? Want a hamburger?

The current mythology does not allow most to even see the problem in all its seriousness and complexity. The standard free-market line is: "Oil palm plantations in Indonesia create jobs, perhaps 6 million jobs." Yes, true, but these six million people and their families will not want to live in a devastated country, surrounded by pollution and starvation. Lack of tropical forest cover will exacerbate the effects of global warming more that the current giant emissions of carbon dioxide from burning peat and wood.

China's experiment in exchanging their environment for cities and money is sputtering out as I am writing these words. In their zeal to pursue unchecked capitalism, Chinese rulers forgot that first people breathe, drink, and eat, and only then they watch TV or buy things on the internet. In other words, we are a part of the environment, not the other way around, as our insane current narrative would have it. An unhealthy damaged environment means no highly organized humans societies, just roaming gangs and warlords. Please look at the broader Middle East after 4000 years of agricultural civilizations. But that's a completely different story...Or is it?

P.S. 11/12/2015. As serendipity would have it, my dear friend, Dr. Charlie Sing, the just retired human geneticist from Ann Arbor, Michigan, emailed me an essay by another dear friend, Wendell Berry, a famous American poet, writer, and philosopher. Here is one of many possible quotations pertinent to this blog:

...But once greed has been made an honorable motive, then you have an economy without limits. It has no place for temperance or thrift or the ecological law of return. It will do anything. It is monstrous by definition.

In 2008, Wendell was thinking the same thoughts as I did after a five-year quest against biofuels and planetary destruction. In August 2008, I resigned my Berkeley faculty position after concluding that my beloved university went mad. In 2007, Berkeley signed a 500 million dollar Faustian bargain with BP to fund a new Energy Biosciences Institute (EBI). This genetically-modified switchgrass-for
-biofuel Institute was headed by a Monsanto representative, Dr. Chris Somerville, who was hired by Berkeley's Chancellor with no consultation with the Academic Senate. After more than 5 years of happy activities, EBI delivered nothing - as science predicted at the onset - and the BP funding stopped.

Otherwise, almost nothing has changed since then, only the universal destruction of ecosystems has progressed nicely, just in time to amplify the negative effects of global warming. In the next blog, I will comment on us, the human pack-men and other monsters trashing the planet everywhere.

Saturday, October 3, 2015

I just arrived in Saudi Arabia after 17 hours of flights from the U.S. My wife and I attended our son's beautiful wedding in Sonoma, California, bonded with our children, students and many friends, and I attended the largest Society of Petroleum Engineers (SPE) conference in Houston, where I realized that I knew most people over fifty. Kind of scary, but what can one expect after being an SPE member for 33 years?

The Patzek family in Sonoma, California, just before the latest enlargement.

You may ask what are my impressions from America after a nine-month absence? There are many positive impressions and some are mixed. First, we miss America. I loved the lush green trees in Texas, and the beautiful live oaks everywhere I looked in my Austin neighborhood. I loved being with my children, friends and neighbors. I did not like the rampant inflation of the cost of food and most living necessities. This inflation has been at least 10% per year in most metropolitan areas, and is not captured by the highly misleading consumer price index (CPI), which registered only 0.4% over the same time period. I did not like the ever-smaller and more expensive meals often prepared from shoddy food stocks. The prices of good food in the U.S. are now on par with Europe; not long ago they were one half. The over-the-counter medications in the U.S. are 2 - 3 times more expensive than in Europe. I did not like paying $475 for a single night in a rather low standard hotel in San Francisco. It was "market pricing" for that particular night, I was told, and the next rooms up were $600 - $1100 per night. That's absolutely crazy!

The high inflation in almost everything one needs to live as a civilized human being is coupled with the very noticeable impoverishment of the American society, and that's really bad news. Why is it happening? Perhaps now I should mention progress and progress traps.

The idea of progress is at most three hundred years old. For more details, please read the exquisite short book by Ronald Wright, "A Short History of Progress." Progress is defined as an irreversible chain of events that with time make our lives continuously better. These events have been mostly linked to the ever-improving technology and social systems that make us live longer, smell better, be happier, and expect more from the future. The latter expectation has been especially strong over the last 20-50 years, depending on where you live. The myth of progress is strongest in the U.S., where technology has delivered more than in other places.

According to Wright: "Myth is an arrangement of the past, whether real or imagined, in patterns that reinforce a culture's deepest values and aspirations... Myths are so fraught with meaning that we live and die by them. They are the maps by which cultures navigate through time." Thus, it is almost impossible to debunk a partially true myth, but let me poke a few holes.

The social myth of progress is curiously at odds with the thermodynamic direction of time that coincides with increase of entropy. In other words, as time progresses the overall mess must increase too. In fairness, most of our mess is exported by the Earth as heat into the cold universe, but all chemical waste stays here, continues to react, and demolishes all living systems on the planet. This deterioration is now very visible wherever I go, including my neighborhood in Austin, where the last 500 acres of pristine land are being stripped of wild oaks and paved with concrete for streets and house slabs. So let's talk about progress traps.

The last two square kilometers of the mostly untouched land are being demolished in my neighborhood in Austin. The wild animals will be chased out, the groundwater level lowered, the water wells all around will dry up earlier, and there will more flash flooding in addition to traffic congestion, but otherwise progress will triumph. Such progress is defined by the Hays county officials, whose minds never left the nineteenth century and myth of the wild conquest of endless new territory. This is exactly how quality of life for all diminishes because a few convert the local environmental services into dollars and run.

The seductive promise of technological progress leads into progress traps. Let me begin with Austin, Texas. In 1983, it was a wonderful place with roughly 350,000 people, so livable that it became the most desirable city in the U.S. By 2015, Austin had 900,000 people, and the great Austin area 1.5 million and counting. Austin is congested beyond belief, very expensive to live, running out of water, and the people who work there are the fifth most unhappy bunch among workers in all American cities. Austin fell into a progress trap by not noticing that if 1x is beautiful, 5x usually is a disaster.

Perhaps the most classical progress trap is weapons. Spears were better than clubs, arrows better than spears, guns than arrows, and bombs than guns. Nuclear warheads are better than all other weapons, and they can extinguish humanity and most life on the Earth. Technological progress has lead to a deadly and irreversible progress trap. Humans have become smart enough to terminate themselves in a few hours.

On a retail scale, fire arms killed 406,396 Americans between September 11, 2001 and December 31, 2013, when the national gun-death statistic stops. Only 3,380 Americans were killed by terrorists, including 2,990 in New York, Washington, D.C., and in Pennsylvania. The technological and social progress traps - the myth of unbounded personal freedom won with arms and the Second Amendment to the U.S. Constitution purchased by the gun lobby - have led to a 120 times higher likelihood that an American dies from a fellow citizen's fire, including himself, rather than from a terrorist's hand. The factor of 100 separates speeds of running and flying a jet (6 vs. 600 miles per hour).

If you live in Chicago, you are 20 times more likely to die from a bullet than a civilian in the last Afghan war that also started in 2001. When you live in Washington, D.C., this ratio is six! Just the massacres in the Columbine High School, Virginia Tech, Sandy Hook Elementary School, and the Umpqua Community College killed 85 people. Now, that's progress!

The second technological progress mega trap is agriculture. Much of agriculture started across the Fertile Crescent in the Middle East about 5000 years ago, but there are glimpses of plant domestication going back perhaps another 5000 years. Regardless of what enthusiasts of the "Green Revolution" and GMOs claim, no new major plant species has been introduced for massive cultivation relative to those cultivated 5000 years ago. Five or six top cultivar crops that colonized humans just as much we colonized them represent most of agriculture on the planet, with an area equal to that of the Indian subcontinent. And those cultivars that were improved, got better through the painfully slow plant breeding, not through instantaneous genetic manipulations.

Today, much of the Fertile Crescent is a parched desert, most of the fertile soil went to the sea, and salt built everywhere because of irrigation. Half of all soil in Iraq is dead because of salination. In Egypt this fraction is one-third. The Central Valley in California is well under way into oblivion, while ground water there is being robbed everywhere and sea water is encroaching on the aquifers along the coast. Have we learned anything from the Middle East history's wrecks?

One can ask why did agriculture explode around the world just 5000 thousand years ago? The most plausible answer is that climate on the Earth calmed down sufficiently to allow this to happen. Earlier climate was too unstable, switching between warm, dry, and ice on a geological dime. Today the seven billion people on the Earth totally depend on industrial agriculture for their survival. More than 1/2 of humans today owe their lives to chemistry as nitrogen fertilizer and field chemicals.

The agriculture progress trap is as final for humanity as the nuclear weapons are. We have become narrowly specialized in obtaining and moving food supplies around the world to keep us alive. All cities of the world must import vast quantities of food from equally vast areas elsewhere. We are as finely tuned to the current calm climate as the mammoths and sabre-tooth tigers were to their climate before they went extinct. Now what if our climate becomes unstable again, and agriculture starts failing at the same time in too many places around the world? Here I must remind you about chemical entropy generated by us as time progresses. Regardless of all other causes of climate change, the gigantic volumes of greenhouse gases generated by humans can not be helping in climate stabilization.

This brings me back to the high rate of hidden inflation, and the increasing poverty and social instability everywhere. As humans are exploding in numbers thanks to their agriculture and life-saving technologies, the entropy bill for all of this progress also explodes. This bill appears as depletion of clean air, drinkable water, fertile soil, rich mineral resources, and all other environmental services that keep us alive. For a while, we have been pretending that finance can replace the physical earth. Well, it cannot and this impossibility translates itself into the degradation of living conditions everywhere, including the insular America. We have had an excellent ride and will continue for a while, but in the end time and entropy will win over anything else.

So how many more years do we have without a major war to control the dwindling environmental resources or lebensraum defined by a last century classic? Notice that if this war is for water and food, it cannot be nuclear. Talk about progress traps.

P.S. Technological complexity is yet another important progress trap described in our book. BP could not properly handle the complex drilling process for the Macondo well in the Gulf of Mexico, and the resulting environmental disaster cost it 62 billion dollars and counting. Volkswagen armed its diesel engine cars with millions of lines of computer code to make them more efficient. But the new engines did not deliver and Volkswagen decided to cheat on emission tests by hiding the much higher GHG gas emissions than those falsified from the sensor readings. This technological and environmental fiasco might cost Volkswagen 87 billion dollars. Both companies will emerge broken from their self-inflicted disasters rooted in system complexity and inability of humans to grasp this complexity.

By the way, how is your closest friend, Smart Phone, doing? It must feel good to caress him/her/it tenderly in your loving hand, doesn't it?

P.S. 01/28/2016. I just came back from Austin, where driving got so much more miserable that I am glad I don't live there now. Austin is booming, real estate prices are at an all-time high, and as with exponential growth anywhere no one has any idea how rude the awakening will be because of the obviously prohibitive cost of such growth. It seems to me that the county and municipal governments there are ideal for the late 19th century settlements, but miserably unimaginative and dumb for a 2-million people strong metropolis century and a half later.

Saturday, August 15, 2015

An ocean of ink has already been spilled on pros and cons of using Hubbert curves to model production from a large collection of wells in one or many reservoirs. In 2010, I published together with my last graduate student in Berkeley, Dr. Greg Croft, a highly cited paper on this subject. I have also commented multiple times in this blog on the different aspects of the Hubbert curve analysis, its limitations, and predictive power.

Since I cannot out-talk or out-convince the numerous critics of this type of analysis, let me give you a simple example of its robustness. This particular story is as follows. At the end of the year 2010, Greg Fenves, at that time Dean of UT's Cockrell School of Engineering in Austin, asked me to make a presentation to the School's Engineering Advisory Board (EAB). Using the results of our recent paper with Greg Croft, I chose to speak about my new work on unconventional resources in the U.S. On April 09, 2011, I made the presentation, which was then internally published by the Cockrell School.

The first two Barnett shale plots shown below were based on the Texas Railroad Commission data through October 2010. In the presentation, I called these plots the "high production scenario." The Hubbert curve with which I matched the production data ending in October 2010, went right between the two local peaks of the data. Of course there was an element of luck, helped by two decades of my experience as a reservoir engineer. Such experience or - for that matter - any other knowledge of reservoir engineering is absent among the economists, political scientists and journalists, who are paid to criticize this type of work.

To see this image in full resolution, please click on it. The total rate
of gas production in the Barnett shale through October 2010, was matched
with a single Hubbert curve. 1 EJ/year ~ 1 trillion standard cubic feet
(TCF)/year. This "high production case" was presented in April 2011, at the Spring meeting of the Cockrell School Engineering Advisory Board (EAB) at the University of Texas in Austin. It was also made available electronically to the EAB members.

To see this image in full resolution, please click on it. Cumulative gas
production in the Barnett shale through October 2010, was matched
with a single Hubbert curve (an integral of the bell curve shown above). The projected ultimate production was at
least 27 TCF. 1 EJ/year ~ 1 TCF/year.

In fairness to lay people, the respected reservoir engineers who saw these curves in 2011, smiled at my naïveté and predicted 60, 100 plus, or more TCF of gas production from the Barnett. In short, most experts were also amused.

Cumulative drilling permits issued by the Texas Railroad Commission for (the mostly horizontal) wells in the Barnett shale. Note that the cumulative permit curve follows a logistic S-curve similar to the cumulative gas production above, only shifted in time. Peak wells (4,065 at the inflection point in 2008) were drilled ahead of peak gas production in 2012. We are beginning to see the ultimate "carrying capacity" of past drilling in the Barnett. To change this S-curve, we need a brand new Hubbert cycle of drilling.

What did I do? I used a two parameter curve (height and width) to describe and extrapolate production from close to 20,000 wells in the Barnett. I knew two things: (1) this production could be matched with one Hubbert curve or 2-3 of them, and (2) I had to go above current gas production (overshoot it) because this production had not already peaked. The first observation is based on the Central Limit Theorem explained in our paper, and the second one is an admission that more wells will be drilled and production will increase further, we just do not know by how much. Experience and intuition allow one to reasonably guess the size of this production increase. Guessing is an art and not all experts are artists.

To see this image in full resolution, please click on it. The total rate of gas production in the Barnett shale through March 2015, is matched with a single Hubbert curve. 1 EJ/year ~ 1 trillion standard cubic feet (TCF)/year.

To see how good this December 2010 prediction was, fast forward five years. I should remind you that the Hubbert cycle predictions of future production of a very large number of wells and/or reservoirs are remarkably stable - the Central Limit Theorem makes sure of this, but I would not be happy if I predicted gas production in the Barnett shale with a 50% error. Luckily, as the plot above shows, I was right on the money, and no corrections were needed. Nevertheless, I could not resist tweaking the peak almost imperceptibly and increased the ultimate gas production from the Barnett by less than 1 TCF. Call it a reservoir engineer's decease.

To see this image in full resolution, please click on it. Cumulative gas production in the Barnett shale through March 2015, is matched
with a single Hubbert curve. The projected ultimate production is at least 28 TCF. 1 EJ/year ~ 1 TCF/year.

In summary, given the current number of wells in the Barnett shale (over 25,000 drilling permits by now) and the already traversed peak of gas production, it is unlikely that I will have to adjust this prediction in the future, but let me play devil's advocate.

The Barnett shale is most unusual in that it has two sets of fractures in the hydrofractured rock surrounding horizontal wells. One set is formed by the stress relief cracks from shear rock failure during hydrofracturing. Think of these cracks as being almost parallel to main hydrofractures and extending some distance away from both sides of these hydrofractures. But the Barnett shale is also likely to have another set of critically stressed (ready to pop), cemented natural fractures perpendicular to the hydrofracture planes. Together these two sets of fractures link during hydrofracturing and form large complex fracture systems that also communicate with the main hydrofractures. Thus, one could use this wonderful property of the Barnett mudrock, not replicated in other major shales, to create in the future many better and cheaper wells in the Barnett. If this happens, I will add a new Hubbert curve to my Barnett shale production model to account for the new wells, and happily report a significant increase (but not by 50%) of gas production there.

About Me

Tad Patzek is Professor of Petroleum and Chemical Engineering at the Earth Sciences Division and Director of the Upstream Petroleum Engineering Center in KAUST, Saudi Arabia.
Between 2008 and 2014, he was the Lois K. and Richard D. Folger Leadership Professor and Chairman of the Petroleum and Geosystems Engineering Department at The University of Texas at Austin. He also held the Cockrell Regents Chair #11. Between 1990 and 2008, he was a Professor of Geoengineering at the University of California, Berkeley. Prior to joining Berkeley, he was a researcher at Shell Development, a research company managed for 20 years by M. King Hubbert of the Hubbert peaks.
Patzek’s current research involves mathematical and numerical modeling of earth systems with emphasis on fluid flow in soils and rocks that can be hydrofractured. He is working on the thermodynamics and ecology of human survival, and food and energy supply for humanity. His current emphasis is the use of unconventional natural gas as a fuel bridge to the possible new energy supply schemes for the world. Patzek is a coauthor of over 200 papers and reports, and a book.